> If the bubble is in cash, illiquid startup investments may be a place to hide.”
How can a bubble be "in cash"?
How can a bubble be "in cash"?
Inflation depends on a number factors, whether it be productivity, supply, unemployment, etc, or how that cash is being spent. If it's being invested, who's to say it isn't in capital goods, thereby reducing cost of goods?
Because it puts more cash back into the economy. It transfers cash from people who previously hadn't been spending it to people who might not be so reserved.
> If it's being invested, who's to say it isn't in capital goods, thereby reducing cost of goods?
That's just the butterfly effect. It's the equivalent to saying that the fed printing money can cause deflation because people might use all the money to pay down debts and then use what would have been interest on the debts to pay down even more principal. It's theoretically possible, and sometimes it even happens, but you still don't expect printing money to cause deflation in general.
It's clear to us all when one says there is a bubble in housing, but this doesn't make much sense, and may well on further elaboration be found to be nonsense!
If one were to be treating cash an as investment, i.e. in a savings account, then one would think a cash bubble would be where you're getting a relatively good return, and were the bubble to burst, the return would collapse. That's clearly not the case now: cash returns little or a loss (interest - inflation).
And in terms of its value, rather than its return, well it's been losing value there too, relative to stocks and housing. So hard to see a bubble there either.